DrGevE – Putting waste to good usehttp://puttingwastetogooduse.co.uk
Thu, 17 May 2018 16:29:01 +0000en-GBhourly1https://wordpress.org/?v=4.9.5Rethinking the waste hierarchyhttp://puttingwastetogooduse.co.uk/2017/10/rethinking-the-waste-hierarchy/
http://puttingwastetogooduse.co.uk/2017/10/rethinking-the-waste-hierarchy/#commentsTue, 24 Oct 2017 08:36:38 +0000http://puttingwastetogooduse.co.uk/?p=1516The term “rethink” is a particular favourite within our sector. Examples of reports and projects abound: rethinking waste, rethinking waste management, rethinking waste crime, rethinking organic waste, rethinking recyclability. What about rethinking the waste hierarchy? Many suggestions have been put forward, expanding the so-called 3Rs (reduce, reuse, recycle) to 5Rs, 6Rs (Rethink, Refuse, Reduce, Reuse, Recycle, Replace) and even 10Rs in an attempt to widen the reach of the hierarchy beyond the waste phase. Is it perhaps time to revisit this 1970s-vintage principle and ask whether it needs to be updated and/or supplemented with other priority frameworks?

The waste hierarchy originated as Lansink’s Ladder when Ad Lansink presented an order of preference for waste management options to the Dutch parliament in 1979. Since then the waste hierarchy has served as the cornerstone of waste management policy, principally as a guide to move waste management away from landfilling into more environmentally desirable options.

However, with the evolution from waste management to resource management and the advent of the circular economy as its leading guiding principle, how does the waste hierarchy stand up in this new context? For example, it has been suggested that ‘prevention’, the first step in the hierarchy, is misplaced here. As experience in the UK has indicated, a product is de facto defined as a waste once it has been discarded, which is at odds with the concept of preventing a product from becoming waste in the first place. Furthermore, Van Ewijk and Stegemann have pointed out in Limitations of the waste hierarchy for achieving absolute reductions in material throughput (2016) that in addressing just the discard element of a product, the waste hierarchy does nothing to encourage practices further up the resource chain, for example to improve resource efficiency and resource productivity, and to minimise total material flow through the economy.

Another crucial aspect of the circular economy, that of encouraging sustainable consumption behaviours, is also untouched by the waste hierarchy, though the European Commission’s good practice guide Public Procurement for a Circular Economy – good practice and guidance (2017) adapts it as the basis for green procurement – reduce, reuse, recycle, recover. Interestingly, the implicit assumption here is that a product is ‘prevented’ from becoming waste, again suggesting that prevention is a strategy that should be separate from the ‘waste’ hierarchy.

The bottom line seems to be that the plus points of the waste hierarchy are its simplicity, clarity and enduring emotional and intuitive appeal, which suggests that tinkering with it, for example by expanding some steps or introducing new steps to force-fit other concepts would make it unwieldy and water down its powerful message. Better perhaps to accept that it holds good for a particular segment/side stream of the circular economy, and to introduce other priority frameworks to support it. Horses for courses.

One option would be to separate the resource chain into three or four discrete elements, and apply appropriate concepts to each. For example, production and manufacture would be characterised by a preference for secondary over virgin raw materials and renewable over brown energy, backed up by resource efficiency and resource productivity targets. The aim here would be to encourage “absolute material reductions through the concept of absolute decoupling” in the words of Van Ewijk and Stegemann.

The product phase would be supported by a hierarchy emphasising the primacy of designing for durability, modularity, repair and reuse, then for recyclability, and finally to promote safe disposal by avoiding the use of hazardous materials – linking with the previous stage to ensure that secondary raw materials and renewable energy are used in preference to virgin/fossil commodities.

The consumption phase would be characterised by a so-called “consumption hierarchy”, which could look something like this:

The discard phase would still be represented by the standard five-step waste hierarchy, except that prevention activities may be better addressed in a hierarchy further up the resource chain.

The waste hierarchy has had a huge influence in changing waste management practices for the better. The present approach attempts to replicate this success in other key elements of the resource chain, but each according to its own characteristics. In particular, disentangling prevention from the discard phasemay give it the focus and attention it sorely lacks at the present time, sitting as it does within the waste hierarchy.

]]>http://puttingwastetogooduse.co.uk/2017/10/rethinking-the-waste-hierarchy/feed/1Innovation in the waste sector is alive and kickinghttp://puttingwastetogooduse.co.uk/2017/10/innovation-in-the-waste-sector-is-alive-and-kicking/
http://puttingwastetogooduse.co.uk/2017/10/innovation-in-the-waste-sector-is-alive-and-kicking/#respondFri, 06 Oct 2017 17:20:13 +0000http://puttingwastetogooduse.co.uk/?p=1489Innovation in the waste management sector is alive and kicking. Such was the take-home message from the ‘Hackathon’ organised by London Waste and Recycling Board (LWARB) in collaboration with RWM and industry partner SUEZ recycling and recovery UK, with a prize co-sponsored by LWARB and SUEZ.

Hackathons are, according to one definition, “creativity marathons. Thoughts become things. Attendees work to create a hack, be it an app, hardware or something completely different”. Hackathons are specifically technology related: this particular event was showcased at the RWM 2017 conference and exhibition.

Targeting small and medium sized enterprises (SMEs), SUEZ offered the following challenge: Using growing trends of mobile and Internet of Things (IoT) in delivering solutions for improving circularity, how can consumers be helped to make educated product purchase, reuse and recycling decisions? The aims were to:

Influence consumer purchasing decisions to help them buy products with an ability to repair, exchange or recycle.

Develop an app that helps with the collection of small volumes or specialist waste or redundant products.

Inform consumers of how materials can be recycled and whether their local municipal collection services can collect and recycle those materials.

Four entries made the short list to pitch their ideas on the day. A web platform and app to connect customers to approved waste management companies for services such as skip hire; a surplus food donation platform; a platform through which unwanted goods can find a home. And the winner – an online, C2C and B2C gadget rental marketplace for high-tech gadgets such as cameras, drones, and virtual reality equipment. The judges felt that Tryatec Technologies’ rental “try before you buy” business idea was the most thoroughly thought through, financially credible and self-sustaining. It also has the potential to truly disrupt the conventional “buy blind and regret later” consumer model. We wish Tryatec’s founders and their new venture well.

While Tryatec won by virtue of its innovative business model, the other short-listed entries highlighted a particular aspect of exchange, sharing and distribution platforms that is often neglected. Many of these are run by volunteers from third sector organisations dedicated to the cause of the circular economy, passionate in their desire to do right by the environment, and give unwanted products a second life. However, they operate on a shoestring budget, relying on donations and the free giving of time rather than potentially restricting access and participation by charging for their services. All aiming to build local community solidarity, and even if operating nationally, tend to develop and expand through locally relevant networks and websites. Nationally, the aggregated social and environmental benefits of such third sector, volunteer-based businesses has never been computed, and hence as a contribution towards the circular economy, has been undervalued by both central and local governments.

With public sector funding streams under severe pressure, the challenge is how to ensure a more sustainable financial future for such ventures, in terms of a steady cash flow and developmental capital. One solution would be to charge for their services, and while this runs the risk of alienating would-be users of modest means, many third sector organisations may have to bow to the inevitable. Without a secure revenue stream none of these businesses would attract the attention of conventional financiers.

With no obvious solution to this conundrum, the UK runs the risk of emasculating a highly effective enabler of the most difficult-to-action components of the circular economy: waste prevention and product reuse.

Recognising the environmental and social value of these organisations and formally integrating them into the resource cycle should be high on the to-do list of BEIS and Defra in respect of their resource-related strategies.

]]>http://puttingwastetogooduse.co.uk/2017/10/innovation-in-the-waste-sector-is-alive-and-kicking/feed/0Circular economy under the microscopehttp://puttingwastetogooduse.co.uk/2017/08/circular-economy-under-the-microscope/
http://puttingwastetogooduse.co.uk/2017/08/circular-economy-under-the-microscope/#respondFri, 18 Aug 2017 07:00:26 +0000http://puttingwastetogooduse.co.uk/?p=1422Big Ideas tend to trace a similar life cycle – great excitement leading to an avalanche of high-level studies making Big Claims, followed by a flurry of policymaking activity building on said studies. Then, a period of introspection sets in. Is the Big Idea all it is cracked up to be? Are the claims overblown? Are the benefits as easy to realise as some would suggest?

The Big Idea of the circular economy is no exception. Although not particularly new (commentators often hark back to the war years, when re-purposing and frugality were the norm) it has been touted as a win-win for both business and the environment. Some Big Claims have been made;

Net material savings of $340-630 billion across the EU

$1 trillion annual growth for the global economy by 2025

3 million extra jobs and unemployment reduction by 520,000 across the EU by 2030.

But the voices of a few naysayers have begun to surface. For example, Julian Allwood in the Handbook of Recycling (2014) questions whether a 1 to 1 substitution of secondary materials for primary raw materials or goods actually occurs in practice to the extent that is typically assumed by circular economy proponents. If not, environmental impacts from the secondary economy will add to the impacts of primary production, rather than displace/reduce these latter impacts. Trevor Zink and Roland Geyer expand on this theme in A Market-Based Framework for Quantifying Displaced Production from Recycling or Reuse (2016) and in Circular Economy Rebound (2017), claiming that as with energy systems, improving resource efficiency and reducing raw material costs might lead to an increase in production that wipes out some of the environmental gains, or even to “backfire”, where the increase in use is proportionally greater than the efficiency increase, leading to higher net environmental impacts. Decreasing aggregate demand – less production and less consumption – is recommended as one way of avoiding circular economy rebound.

This theme is picked up by Carina Millstone in Frugal Value: Designing Business for a Crowded Planet (2017) but with a twist. Millstone favours replacing global private sector companies with local community-based structures. Millstone claims that “the purpose and structure of the private sector have created conditions of unsustainability” by fuelling consumption for the profit motive, and advocates “de-growth”, supporting local business offering “frugal” products and services.

But paradoxically, while these commentators fret about the circular economy and some of its business models encouraging the wrong sort of economic growth, Defra Minister Dr Thérèse Coffey’s opposition to the circular economy is that “there are no opportunities for growth outside of a closed loop system”, according to evidence given before the Environmental Audit Committee in 2016.

Should we worry about circular economy rebound increasing consumption or should we purposefully design a policy framework for more economic growth?

Perhaps the answer is both. Arguing for de-growth or anti-growth is essentially taking a privileged first world perspective. There remain huge swathes of population who have a right to economic betterment, and for whom consumption and economic growth is the difference between squalor and dignity. Indeed Zink and Geyer acknowledge in a footnote that “there may be significant welfare benefits to increased connectivity in the developing world”. For all its potential limitations, the circular economy offers a better way of achieving sustainable growth than the linear economy. Rather than discarding the concept, it should be properly designed and applied.

But, for a Big Idea that has gained so much political traction, the paucity of academic research, especially the input of academic research to inform policymaking, is striking. For example, we still lack a robust macroeconomic model. Many of the Big Claims made by circular economy proponents have not been rigorously analysed or tested; some are based on over-optimistic assumptions. We badly need a solid body of academic inquiry into the circular economy, to ground truth circular economy policy and not over-promise on what it can achieve.

A degree of circular economy fatigue has begun to creep in – enough rhetoric, now walk the walk. But what we are finding in the real world is that walking the walk is proving more difficult than we have been led to believe. Nirvana is not round the corner, but a hard slog away.

]]>http://puttingwastetogooduse.co.uk/2017/08/circular-economy-under-the-microscope/feed/0Communicating datahttp://puttingwastetogooduse.co.uk/2017/07/communicating-data/
http://puttingwastetogooduse.co.uk/2017/07/communicating-data/#respondTue, 18 Jul 2017 13:39:35 +0000http://puttingwastetogooduse.co.uk/?p=1397The importance of science in our daily lives is taken for granted these days – no one would gainsay the impressive advances we have made these past two generations, in all aspects of life. But along with technological prowess we are paying an environmental price for the lifestyles we have come to expect and enjoy – pollution, waste, loss of habitat, climate change … the list lengthens.

Conveying environmental information and data to non-scientists has challenged the ingenuity of communicators. In particular, how does one comprehend very small or very large numbers that we rarely, if ever, experience personally? The answer – by analogy.

In the 1970s, the challenge was pollution and the significance of very small numbers. Concern over pesticides, dioxins and PCBs sparked novel ways of depicting what a part per million or a part per billion meant. The swimming pool analogy was a particular favourite – half a teaspoon in an Olympic-size swimming pool (ppb). Other efforts: one minute in two years (ppm), one inch in 16 miles (ppm), three seconds out of a century (ppb), and if you jump 1 foot in the air you have travelled I ppb distance to the moon.

As the sheer scale of waste became apparent, the focus shifted to very large numbers. Football pitches, buildings, ships and double decker buses became hot favourites. Some examples from the website RecycleBins:

The glass bottles and jars we throw away will fill the Empire State Building every 3 weeks

The paper and card we use annually in the UK weighs the equivalent of 260 QE2 liners

Every Christmas we throw away enough wrapping paper to cover 11,000 football pitches

The amount of waste paper sent to landfill each year would fill 103,000 double decker buses

You could drive a car 11 metres on the oil it takes to make 1 plastic bag

And another – each year the US produces garbage equal to the weight of 5,600 aircraft carriers, 247,000 space shuttles or 2.3 million Boeing 747 jumbo jets.

Apart from “so what” and the quizzical look some of these analogies may prompt from those unacquainted with spacecraft and floating behemoths, does this admittedly well-intentioned mode of communication convey anything meaningful or stir up the sort of emotions the communicator intends? Does it lead to a light bulb moment and conversion to a concerned citizen or is it misconceived and patronising?

Answering yes or no depends on whether there are better ways of communicating environmental information, other than through contorted analogies. Of course each response is entirely personal, but trawling the acres of media stories on impending environmental disasters suggests that giving it straight may be more effective. One recent example is the statement launching the Ellen MacArthur Foundation’s report The New Plastics Economy, which warns that if plastic pollution is not tackled, by 2050 our oceans are expected to contain “more plastics than fish (by weight)”. Now that is a picture to conjure with. Man eats fish, fish eats plastic, ergo man eats plastic. An outcome one can relate to, and take action.

But old habits die hard. Take the most recent (July 2017) widely announced statement that “Industry has made more than 9.1 billion tonnes of plastic since 1950 and there’s enough left over to bury Manhattan under more than two miles of trash, according to a new cradle-to-grave global study.” Close examination of said study (Production, use and fate of all plastics ever made) shows that the authors made no such claim. In fact the study is a straightforward and sober assessment of plastics production and use. Clearly the public relations machine has concocted a souped-up analogy to grab the attention of the media, which duly obliged. Given that Manhattan is one – ten billionth of the earth’s surface area, objectively speaking 70 years of waste accumulation limited to Manhattan does not seem that big a deal. In fact the world would be a safer place if Manhattan was turned into a landfill site and all our plastic waste was buried there, rather than allowing it to be dispersed throughout our environment. It is the ubiquitous nature of plastic pollution that poses the problem, not the quantity of waste per se.

But giving it straight also has its dangers. In some hands scary information masquerading as scientific fact can spawn veritable industries of campaign and protest. Depending on where one stands on the issue, the GMO debate could well qualify.

In the long run raising awareness of science is paramount. Since 1987 India celebrates 28 February as National Science Day, “raising public appreciation of scientific issues for the development of the nation … science for nation building”. In the UK the alarming fall in the numbers of students taking science-related subjects in our schools and universities must give cause for concern. In an increasingly environmentally challenged world the gap between the public understanding of science and public information as it is communicated by scientists and interest groups cannot be allowed to widen.

]]>http://puttingwastetogooduse.co.uk/2017/07/communicating-data/feed/0Brexit and the Circular Economy Packagehttp://puttingwastetogooduse.co.uk/2017/06/brexit-and-the-cep/
http://puttingwastetogooduse.co.uk/2017/06/brexit-and-the-cep/#respondFri, 23 Jun 2017 09:55:11 +0000http://puttingwastetogooduse.co.uk/?p=1399The publication of the European Union (Withdrawal) Bill, converting all extant EU laws into UK law, again brings into focus the likely fate of the EU’s Circular Economy Package (CEP) post-Brexit. All guesswork and supposition of course, since a forward-looking waste management vision and plan for the UK is conspicuously lacking at the moment.

Incorporation of the CEP into UK law might or might not proceed on a formal basis. If enacted in the European Parliament (EP) before exit day, the UK may choose to interpret its adoption as pertaining to its implementation date, typically 2-3 years from the date of enactment – a potential get out of jail card if the government was ambivalent about adopting it. Even if the CEP was transferred into UK law, the Bill gives Ministers powers to “correct problems arisings from withdrawal” by invoking statutory instruments. The examples given in the Bill’s explanatory notes are predictably bland, but striking out aspects of environmental legislation such as the hard targets in the CEP by Ministerial decree is not out of the question – concerns have already been raised with respect to, for example, EU air quality legislation.

And the mood music from the present government seems to suggest just that. Under the Estonian presidency, trilogue discussions have commenced between the European Council representing the Member States (including the UK), the Commission and the EP in order to find a compromise position if possible by the end of the year. The EP and the Council have differing positions on key issues:

Extended Producer Responsibility: EP and Council differ in the scope of application of Article 8a.

Defra’s objection to the initial CEP launched by Commissioner focused on the supposedly poor quality of the Commission’s economic assessment supporting 70% recycling by 2030. Defra’s own cost-benefit modelling suggested a more modest 55% recycling as “feasible”. Furthermore, Defra’s recent post-implementation review of the UK’s packaging regulations, incorporating a PRN system manifestly at odds with Article 8a of the CEP, advocated its continuation.

The likely compromise position between the Council and EP positions on recycling targets could arguably be 65% recycling by 2030, which is a long way from Defra’s “feasible” 55%. Combining that with the continuation of PRNs in the face of the possible imposition of Article 8a sends a confusing signal as to Defra’s long term intentions. Given the distance between the UK’s positions on these and other matters and even the Council’s formal negotiating position in the trilogues, and given the current government’s aversion to hard regulation, the odds are that the UK could ignore or strike out aspects of the CEP to which it is unsympathetic. Always bearing in mind that while Defra ostensibly represents the UK in the Council, domestically its writ extends over England, with the other devolved administrations crafting their own, more ambitious strategies.

In terms of providing the long term legislative certainty we ask for, especially the certainty that targets give us, that is not helpful. Of course that could change with a change of government, or if the UK embraced the EU single market as opposed to going for a hard Brexit.

]]>http://puttingwastetogooduse.co.uk/2017/06/brexit-and-the-cep/feed/0Brexit – reflecting on policyhttp://puttingwastetogooduse.co.uk/2017/06/brexit-reflecting-on-policy/
http://puttingwastetogooduse.co.uk/2017/06/brexit-reflecting-on-policy/#respondThu, 15 Jun 2017 10:02:53 +0000http://puttingwastetogooduse.co.uk/?p=1401The result of last June’s referendum was greeted with dismay by most waste watchers, concerned that a hard Brexit would pull the rug from under our sector’s feet, exposing a policy vacuum. Our first reaction was to ask for the entire EU waste acquis to be retained – including the Circular Economy Package (CEP) currently under discussion. But perhaps we should now move from reaction to reflection, and sketch out in broad terms what policies we would like to see post-Brexit. While the page is not exactly blank, Brexit does give us an opportunity to think afresh.

Here are some suggestions, in no particular order.

Make resource productivity the sine qua non of the UK’s industrial strategy. We need a more balanced economy that promotes and grows UK manufacturing. The CEP and Industrial Strategy green paper are both deficient here; the former bottling out of setting resource productivity indicators and targets, and the latter relegating resource productivity to a sideshow. Putting non-labour productivity centre stage will de facto formalise the deployment of secondary materials and recovered energy as preferred resource inputs.

Update the Waste Management Plan for England. The 2013 Plan has been rendered obsolete by stagnating recycling rates, shortfalls in domestic residual waste infrastructure capacity and an uncertain European export market – collectively constituting an impending market failure that England must address. An updated Waste Management Plan must also be fully integrated into the proposed UK Industrial Strategy.

Revise public sector procurement rules. It is deeply anachronistic that EU procurement legislation gives one actor special dispensations over the other with regard to contract self-award, VAT exemptions and suchlike. The Open Public Services White Paper (2011) adopted a neutral ideological stance, promoting a “truly level playing field between the public, private and voluntary sectors” such that “competition is free and fair”. The argument was not about favouring the private sector over the public sector, but about open competition under common rules giving the taxpayer better value for money. Let’s resurrect these principles and level the playing field.

Prioritise innovation and commercialisation of waste-to-value transformations. The potential for using waste as a starting material for value-added products is huge. Taking the bioeconomy, the report Achieving Growth Within estimates that over 10 years creating proteins and nutrients from waste sources will attract EU-wide investment of €12 billion. Add in non-biological resources and the value-added multiplies several-fold. The BEIS industrial strategy offers an ideal framework within which to mainstream such waste-based transformative processes, supported by government investment in R&D.

Get a grip on the data deficit. For too long the UK has been handicapped by poor quality waste data, both in terms of coverage and granularity. Waste Data in the UK, a report for the RWM Ambassadors, recommended to Government a route map for improvement which is being actioned in part. Significant benefits would flow from a concerted effort to hardwire a more robust UK-wide data management system.

Focus on remanufacturing. Described as the “arguably the gold standard” in resource-efficient strategies, remanufacturing can provide a significant boost to jobs and growth in the UK. However, while other countries are capitalising on its potential, the UK is in danger of being left behind (£15 billion output value in China versus £5.6 billion in the UK). Again, another plank of the Industrial Strategy.

Save for procurement rules, all of the above have been within the gift of the UK to implement, irrespective of whether we were in or out of the EU. So let’s not pretend that we were hamstrung by our membership.

No vision = no ambition = no action.

]]>http://puttingwastetogooduse.co.uk/2017/06/brexit-reflecting-on-policy/feed/0Another opportunity for the fresh thinkinghttp://puttingwastetogooduse.co.uk/2017/05/another-opportunity-for-fresh-thinking/
http://puttingwastetogooduse.co.uk/2017/05/another-opportunity-for-fresh-thinking/#respondThu, 18 May 2017 10:03:36 +0000http://puttingwastetogooduse.co.uk/?p=1395With a hard Brexit now on the cards, we seem to be veering between bravado (releasing ourselves from “EU environmental diktats”, according to one quote) and talking ourselves into a blue funk over the prospect of losing the very bedrock of our sector’s foundational policies and modus operandi.

The truth is that while the waste management sector relies overwhelmingly on regulation to conduct its business, the choice of policy levers for moving waste away from disposal and into value-added processes, be it as products or as energy, is relatively narrow. If, as our government insists, the UK wants to progress the resource agenda, then the architecture of UK diktats will very likely end up looking like the diktats from Brussels – more prevention, more recycling, less landfilling, and suchlike – with similar implications for infrastructure spend.

We may even have accepted at face value the alleged stultifying effect of EU legislation on national policy. But EU legislation gives space for independent thinking. Take the example of organic waste. The Biowaste Directive stalled years ago, the Thematic Strategy on Soil Protection is too broad to give our sector much policy direction, and the Commission appears to have all but abandoned discussions on end of waste for compost. The Landfill Directive tells Member States how much municipal biowaste must be diverted but not what to do with this diverted material – nor does it address commercial biowaste. The Commission’s focus on food waste is quite narrow. Some potent policy levers – for example, fiscal – are left to the discretion of individual Member States.

So while we may certainly have concerns over the implications of Brexit, and while EU policymaking is not exactly a sideshow, we should not downplay the latitude for national policymaking, even while respecting EU policy direction. The UK has arguably led the way with landfill tax, the quality protocols, the Climate Change Act and the fifth carbon budget, various renewable energy support schemes, the GIB’s funding of infrastructure, the Love Food Hate Waste campaign, and more.

Indeed Scotland and Wales remind us that even were the UK to have remained in the EU, it by no means prevents us from thinking for ourselves. Wales has crafted an entirely new policy framework, built around ecological footprinting. Other Member States have applied Extended Producer Responsibility to a far wider range of products than required by EU Directives, and have bespoke support schemes (ORPLAST in France). The bottom line is that we should not need the EU to tell us that improving resource productivity is a good thing, nor does the excuse that EU membership has prevented the UK from developing progressive resource-based domestic policies hold water.

The UK can build on the foundation we have jointly created with our EU partners. Fine-tuning definitions, extending quality protocols to encourage wider application of waste-derived products, further developing waste-to-energy policy, changing state aid rules to better support transformational technologies to commercialisation, removing Teckal distortions, introducing fiscal measures to promote remanufacture – are but some of our options. On the ground, partnerships like Resource London and Resource Greater Manchester are a welcome sign that local government at least is not standing still.

Handled progressively and positively, Brexit presents another opportunity for the fresh thinking we should have done a while ago, to move our sector forward. Brexit appears to have sharpened the urgency for revitalising industry so we have a more balanced and self-reliant economy. Together with the 25 year Environment Plan, this is a once in a generation opportunity for our sector to be fully integrated into the fabric of the UK economy – given the political will.

]]>http://puttingwastetogooduse.co.uk/2017/05/another-opportunity-for-fresh-thinking/feed/0Another commodities crashhttp://puttingwastetogooduse.co.uk/2017/04/another-commodities-crash/
http://puttingwastetogooduse.co.uk/2017/04/another-commodities-crash/#respondFri, 28 Apr 2017 08:47:20 +0000http://puttingwastetogooduse.co.uk/?p=1392The news that oil prices are again on the way down after signs of a rally earlier in the year suggests that the challenges faced by the secondary materials market are not yet fully resolved.

Not only has the price of Brent oil dipped below $50 a barrel, but industrial metal prices have also fallen, affecting materials such as iron, steel, copper and zinc. In April 2017 commodity price indices, capturing a basket of traded commodities, were reportedly back at 2016 levels. Demand for iron ore and other materials has fallen by over 30% principally as a result of a softening of China’s economy, with stockpiles growing as infrastructure projects slow.

The market for recycled plastics was particularly badly hit during the previous slump in oil prices, and there is a danger of history repeating itself this time round. With softening demand the spotlight of end-users inevitably falls on quality as opposed to quantity. China’s year-long National Sword 2017 campaign aims to do just that, continuing the work of Operation Green Fence in monitoring imports of resource products including industrial waste, electronic scrap and plastics.

None of these ominous demand-related signals appears to have phased the European Parliament’s committees, nor dampened their enthusiasm for raising statutory recycling rates to – as many at the sharp end of the secondary raw materials (SRM) market would regard – recklessly high levels.

Structural failures in the SRM market continue to exacerbate the mismatch between the dynamics of supply and the dynamics of demand. For example:

Externalities associated with the extraction and processing of virgin raw materials are not fully costed into their price. One estimate suggests that the price of copper and of beryllium would increase by 12% and 327% respectively, were the cost of greenhouse gas emissions properly factored in.

Virgin raw material price trends typically mirror energy – and for plastics, specifically its starting material, oil – price trends. SRM prices tend not to be determined by production costs, but are pegged to the price of virgin raw materials in the long run. A general global economic contraction will reduce demand for raw materials generally, but because virgin raw material flows are far larger, price reductions during periods of excess stock can undercut SRM prices. The scrap steel market has been affected in this way.

The cost structure and price setting mechanisms for the SRM industry are entirely different to that for virgin raw materials. SRM costs (and consequently market prices) are based on the costs of waste collection and processing, which are primarily driven by regulation (recycling targets, landfill diversion targets, etc). Virgin raw material extraction is driven by economic demand, and unlike waste collection and regulatory-mandated recycling, can be suspended when demand falls. Conventional risk management measures such as long-term stockpiling cannot be applied because of the need for cashflow.

For these reasons, the market for SRM has been inherently unstable and in the long run likely to turn unsustainable in the face of ever-more ambitious legislation to increase recycling, as proposed in amendments to the European Commission’s Circular Economy Package.

Our sector has consistently argued that high recycling rates should be balanced by appropriate demand-side measures if the post-crash problems experienced by secondary material suppliers are not to be repeated. The Environment Council’s and Trilogue discussions on the Package provides an opportunity to inject a note of pragmatism into the Package, and to reverse the more egregious amendments proposed by the European Parliament.

According to Gev, data forms the backbone of the circular economy, which is why society needs policymakers to put big data “front-centre of the resource strategy.”

The retail, banking and many other sectors joined a digital revolution and the resource sector has to follow suit. This video explains why data plays an important role and is crucial in delivering a circular economy.

Gev comments:

“As resource managers we want to collect smart data at the business level and pass financial savings and environmental benefits to our customers.”

This topic was recently explored at the ‘Finance, the Catalyst to the Circular Economy’ conference hosted by ING Wholesale Banking, the Dutch Embassy and Green Alliance last month (March).

The circular economy relies not only on new technologies that recover and recycle materials to higher quality standards suitable for incorporation into manufacturing processes, but also on new business models. Two business models in particular have received a lot of attention from companies and from policy makers.

The servitisation model

In the servitisation model, the outright sale of a product such as a photocopier, a car or a light bulb is replaced by the sale of a service. For example, payment would be related to pages photocopied, miles driven or by the amount of light used.

Ownership of the product remains with the company providing the service, which is retained through leasing a product. Contractual arrangements with the customer will differ, dependent on the services offered, such as who controls maintenance.

The product life extension model

The product life extension model relies on products being retrieved after use.

After repairing, upgrading or remanufacturing, the product is re-marketed and put back into use. This way, more of the value in the product is retained and circulated back into the economy. In closed loop form, this model relies on buy-back or take-back schemes to return the used product to the manufacturer. In open loop form the used product is collected by a third party (such as a charity), repaired or refurbished, and then sold to consumers through a retail outlet.

An example of the income stream that can be generated through this model, Green Alliance have estimated in their report Resource Resilient UK that a reused iPhone retains around 48 per cent of its original value. In contrast, the value when dismantled with materials recovered as recyclates is just 0.24 per cent of its original value. Retaining value through reuse makes good business sense!

What is the impact?

These models have been in use for years, even decades; example of which include high-value, complex products such as cars, aero engines and hospital scanners.

These products are a small, highly specialised segment of the wider consumer market. The idea of the circular economy is to mainstream these business models. In order to cover the sort of everyday uses and functions the average consumer takes for granted through the outright purchase of a product.

This was the topic discussed at the Finance conference. New circular technologies and circular business models require financing, just as conventional businesses relying on linear take-make-dispose models do. But the challenges are different.

For example, when a use or function is “servitised”, the company no longer receives an up-front payment for the product. The product is paid for over the lifetime of the service contract, which may extend over several months or years.

If a contract is terminated early or the customer files for bankruptcy, the product may not be fully paid for. This, in turn, has implications on cash flow, and also on the perceived creditworthiness of companies wanting to borrow or raise capital. In instances where a particular product is embedded in a larger scheme and is owned by the customer, but the company contracts the service, loss of ownership of that product deprives the company of assets to put up as collateral against a loan. (ING cites the example of a light fitting in a building).

These are some of the issues that need to be addressed if circular models and technologies are to be adopted.

What are the next steps?

SUEZ has experience of seeking funding for new circular technologies. For instance, a plant designed to convert plastic waste into a diesel fuel. SUEZ can relate to the way in which technical and product-related aspects (scale-up from demonstration size, quality of and secure markets for the product) impact on the risk profile of the development, and hence of the willingness of banks and venture capitalists to fund the projects.

Discussions around the circular economy have generally focused on technical and design fixes.

How the post-consumer capture rate of materials and products can be improved.

Systems changes that improve the quality of recyclates.

Changes to the design requirements for products to improve recyclability and repairability.

I believe the time has come to bring the finance sector to the centre of these discussions. A host of issues need addressing, ranging from how credit risk on circular business models can be mitigated, to forms of contract that can protect companies and lenders alike in the event of a bankruptcy.

Without their input, circular business models and circular technologies will continue to operate on the fringes of our economy.